Automobile Industry Is Highly Competitive BMW Had Case Study

Excerpt from Case Study :

automobile industry is highly competitive. BMW had temporary set-backs caused by competition from Lexus, Acura and Infiniti in the late 1980s, but rebounded to claim a significant position in the luxury/performance segment. BMW expects its new Z3 Roadster to engage in competition with other luxury car import manufacturers such as Porsche and Mercedes. The automotive industry is mature and market share is critical to survival. Consumers are less brand-loyal than in the past, and every market segment has an increasing number of choices. To increase sales and gain ground in the market share battle, companies must improve their ability both to acquire first-time customers and to develop customer loyalty to their current brands.

Prior to Phase I marketing efforts for the Z3 Roadster, BMW was a very traditional company.

It advertised through traditional media, mostly print and television, and in traditional ways. BMW was thought of as being a serious and tradition-bound company with customer perceptions that BMW meant German manufacturing with resulting quality engineering and driving performance. BMW cars were branded as "Ultimate Driving Machines."

The Z3 Roadster required a major revamping of BMW's marketing efforts and Phase I was undertaken to make several changes. First, traditional marketing would not be sufficient for the new vehicle because the Z3's target market was defined in psychographic terms rather than in demographic terms. Non-traditional media would be more cost efficient for the psychographic segmentation and would deliver a broader audience. The Z3 was marketed as a fun and stylish vehicle while preserving the BMW driving performance reputation. And, Phase I replaced "Made in Germany" with "Made by BMW" to reflect that the Z3 was manufactured in Spartanburg, South Carolina.

Statement of the Problem

While Phase I was a great success for BMW, the company needs to more fully assess some of the shortcomings of this initiative. And, because Phase I ended well before the actual launch of the new Z3 Roadster, a Phase II marketing strategy needs to be defined that will begin in January 1996. This new phase should compliment and extend the success of Phase I as well as incorporate lessons learned.

Phase I has adequately assessed the need for both traditional and non-traditional elements with a 40/60 split, respectively, between the two. This case study has down played demographic segmentation because of the different psychographic characteristics of its expected buyers that fall across multiple demographic segments. However, it appears that demographic considerations need to be considered more strongly in the selection of traditional advertising vehicles. For example, all traditional television and print advertising is currently on a national basis, but it's likely that there are certain local markets, namely large cities, make good advertising targets through the use of local newspapers. Also, there's a noticeable lack of focus on Generation Xers in the traditional advertising efforts. Although this group is tough to reach through traditional advertising, there are traditional vehicles that reach out to this group.

The non-traditional elements of Phase I also present several ongoing issues for BMW as well. Throughout many promotions, BMW had lost control of its brand. Although nothing bad came of it, this was a very risky strategy and BMW can consider itself lucky. For example, in the James Bond Promotion, BMW did not even have a guarantee that the Z3 Roadster would even be shown in the movie. And, in the Radio DJ Program as well as the Tonight Show with Jay Leno, BMW did not have ability to direct the context or usage of its car.

While the goal of Phase I was to reach a broad range of consumers, many aspects of the marketing campaigns were limiting. The Neiman Marcus Christmas Catalog targeted only Neiman Marcus customers and the New York Central Park press launch reached New York City residents. The "Go: An American Road Story" Video required interested parties to call in to receive the video rather than BMW proactively sending the video out to a target audience.

The BMW Internet site was innovative for its time and recognized the growing importance of the Web as an importance advertising channel. Hindsight tells out that eighty-five percent of BMW purchasers would use the Internet before purchasing a BMW by the year 2000. But, the BMW Internet site represents one of only many possibilities for gaining mind share through the Internet.

BMW has done an amazing job of creating "word-of-mouth" marketing buzz through traditional and non-traditional advertising. But, Phase I was not a complete integrated marketing communications plan that synthesized the strategic roles of a variety of communications disciplines including advertising, direct marketing, sales promotion, and public relations to provide maximum communication impact.

Part of the reason was because Phase I occurred well in advance or product availability. But, Phase II will need to focus on rounding out Phase I's advertising and public relations with more concrete promotional strategies at dealerships. This means more than marketing buzz, it means making potential buyers act on their interest by providing motivations to purchase.


Plan A is the preferred recommendation, followed by Plan B. And then Plan C. These recommendations differ in their views on the use of traditional and non-traditional advertising.

Plan A BMW will need to determine the best media schedule for Phase II. The options are to either choose to do continuous advertising to schedule ad exposures evenly over all week or to follow a strategy of pulsing. Research shows that continuous advertising is optimal for nearly all situations and this is the recommendation for BMW in this plan as well as alternative Plan B. And Plan C.

Plan A maintains the existing 40/60 split between traditional and non-traditional elements. This strategy assumes that BMW has determined the correct advertising mix as indicated by the success of Phase I. But, it adds more demographic segmentation considerations to the traditional elements than those in Phase I. Specifically, it recommends more local targeting in local newspapers and events as well as a stronger focus on print media and television shows that attract the Generation Xers. Plan A calls for event sponsorship to be a large part of non-traditional marketing efforts, but this time with more attention to brand control. It's encouraged that the Z3 Roadster be included in BMW's sponsorship of the Atlanta Summer Games. BMW should also try to obtain endorsements from American athletes participating in the events. While, individual endorsements can be risky if the individual becomes engaged in some dubious behavior (recall the Madonna fiasco), world-class athletes present lower risks than other types of celebrities. Also, the original suggestion by BMW executives for a fashion world tie-in needs to be revisited to give the large base of female consumers more attention.

Plan A also strives to make Phase II more of an integrated marketing communications plan. Some suggestions include the use of the "Go: An American Road Story" in direct marketing campaigns, the update of the BMW Internet site to do more to turn online interest into actual dealership visits, promotional strategies at dealerships, and exploring the Web for affiliate marketing opportunities. The introductory Press Launch in Central Park needs to be followed up with general availability announcements and needs to continue to reinforce the success of the Z3 Roadster into the American market.

Plan B

Plan B. calls for a 60/40 split for traditional and non-traditional advertising elements. The philosophy behind this recommendation is that "marketing buzz" will need to be followed by more concrete demographic targeting to be effective. Under this proposal, more segmentation would be performed in both traditional and non-traditional advertising. It is consistent with the traditional recommendations made in Plan A with more local targeting, but would call for an even bigger focus on Generation Xers and late Baby Boomers as well as males and females. And, event sponsorship stays, but with…

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